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AP Microeconomics

Subjects : economics, ap
Instructions:
  • Answer 50 questions in 15 minutes.
  • If you are not ready to take this test, you can study here.
  • Match each statement with the correct term.
  • Don't refresh. All questions and answers are randomly picked and ordered every time you load a test.

This is a study tool. The 3 wrong answers for each question are randomly chosen from answers to other questions. So, you might find at times the answers obvious, but you will see it re-enforces your understanding as you take the test each time.
1. Goods that are both rival and excludable. Only one person can consume the good at a time and consumers who do not pay for the good are excluded from consumption






2. Excess supply; exists at a market price when the quantity supplied exceeds the quantity demanded.






3. Consumer income - prices of substitute and complementary goods - consumer tastes and preferences - consumer speculation - and number of buyers in the market all influence demand






4. 0 < Ei < 1






5. Labor demand for the firm is MRPL curve. The labor demanded for the entire market DL = ?MRPL of all firms






6. The additional benefit received from the consumption of the next unit of a good or service






7. Ed = 0 - no response to price change






8. The total quantity - or total output of a good produced at each quantity of labor employed






9. ATC = TC/Q = AFC + AVC






10. Costs that do not vary with changes in short-run output. They must be paid even when output is zero.






11. The price of a good measured in units of currency






12. The case where economies of scale are so extensive that it is less costly for one firm to supply the entire range of demand






13. The firm hires the profit maximizing amount of a resource at the point where MRP = MRC






14. Ed = 1






15. For one good - constrained by prices and income - a consumer stops consuming a good when the price paid for the next unit is equal to the marginal benefit received






16. The output where AVC is minimized. If the price falls below this point - the firm chooses to shut down or produce zero units in the short run






17. The more of a good that is produced - the greater the opportunity cost of producing the next unit of that good






18. A firm that has market power in the factor market (a wage-setter)






19. Occurs when there is no more incentive for firms to enter or exit. P=MR=MC=ATC and profit = 0






20. Pmc < MR = MC and Pmc > minimum ATC so outcome is not efficient - but profit = 0.






21. Occurs when an economy's production possibilities increase. This can be a result of more resources - better resources - or improvements in technology.






22. Total product divided by labor employed. APL = TPL/L






23. A group of firms that agree not to compete with each other on the basis of price - production - or other competitive dimensions. Cartel members operate as a monopolist to maximize their joint profits






24. An economic system based upon the fundamentals of private property - freedom - self-interest - and prices






25. The change in quantity demanded that results from a change in the consumer's purchasing power (or real income)






26. Measures the cost the firm incurs from using an additional unit of input. In a perfectly competitive labor market - MRC = Wage. In a monopsony labor market - the MRC > Wage






27. The study of how people - firms - and societies use their scarce productive resources to best satisfy their unlimited material wants.






28. The ability to set the price above the perfectly competitive level






29. Production of maximum output for a given level of technology and resources. All points on the PPF are productively efficient






30. A good for which higher income increases demand






31. The sum of consumer surplus and producer surplus






32. The additional cost incurred from the consumption of the next unit of a good or a service






33. Es = (%dQs) / (%dPrice)






34. Total revenue rises with a price increase if demand is price inelastic and falls with a price increase if demand is price elastic






35. The combination of labor and capital that minimizes total costs for a given production rate. Hire L and K so that MPL / PL = MPK / PK or MPL/MPK = PL/PK






36. A measure of industry market power. Sum the market share of the four largest firms and a ratio above 40% is a good indicator of oligopoly






37. The practice of selling essentially the same good to different groups of consumers at different prices






38. Holding all else equal - when the price of a good rises - suppliers increase their quantity supplied for that good






39. Exists when the production of a good creates utility for third parties not directly involved in the consumption of production of the good






40. The difference between total revenue and total explicit and implicit costs






41. TR = P * Qd






42. Goods that are both nonrival and nonexcludable. One person's consumption does not prevent another from also consuming that good and if it is provided to some - it is necessarily provided to all - even if they do not pay for that good






43. Measures the value of what the next unit of a resource (e.g. - labor) brings to the firm. MRPL = MR x MPL. In a perfectly competitive product market - MRPL = P x MPL. In a monopoly product market - MR < P so MRPm < MRPc.






44. The imbalance between limited productive resources and unlimited human wants






45. Additional benefits to society not captured by the market demand curve from the production of a good - result in a price that is too high and a market quantity that is too low. Resources are underallocated to the production of this good






46. The rational decision maker chooses an action if MB = MC






47. The difference between total revenue and total explicit costs






48. The change in quantity demanded resulting from a change in the price of one good relative to other goods






49. Factors of production - 4 categories: labor - physical capital - land/natural resources - and entrepreneurial ability






50. Two goods are consumer substitutes if they provide essentially the same utility to consumers






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